Cognizant Technology Solutions Corporation · NASDAQ:CTSH
Cognizant Technology Solutions — Investor Day (November 2018)
25 slides from Cognizant Technology Solutions's investor day presentation, Nov 16, 2018
Slide 1: Bringing it All Together: Financials & Shareholder Value
Investor Day November 16, 2018 Bringing it All Together: Financials & Shareholder Value Karen McLoughlin | Chief Financial Officer
Slide 2: Forward looking statements
Forward looking statements This Investor Day presentation includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, an
Slide 3: Shareholder value creation across technology shifts and evolving skillsets
Shareholder value creation across technology shifts and evolving skillsets Digital 90 80 CTSH $ Price per Share, Split Adjusted 70 Internet 60 50 Client Server 40 30 Mainframe 20 10 0 1994 1995 1996 1997 1998 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 2014 2
Slide 4: Looking ahead: balanced approach to shareholder value
Looking ahead: balanced approach to shareholder value Strong top line performance supported by increasingly diverse and digital opportunities Capital Revenue Return Growth Operational excellence driving ongoing margin expansion and operating flexibility Comprehensive approach to capital allocation,
Slide 5: Revenue Growth
Revenue Growth
Slide 6: Pivoting to digital capabilities accelerating mid-term growth
Pivoting to digital capabilities accelerating mid-term growth Mid-term Growth Targets Organic Constant Focused investment in six advanced Currency 6-9% capabilities at the core of our digital strategy: Revenue CAGR(1,2) Digital Engineering, Interactive, Industry and Platform Solutions, Intelligent P
Slide 7: Strong positioning across industries underpins mid-term revenue targets
Strong positioning across industries underpins mid-term revenue targets 3Q YTD 2018 organic constant currency revenue growth 3Q YTD 2018 organic constant currency revenue growth contribution +3.2% +7.7% +8.5% +15.7% +7.1% 5,000 3Q YTD 2017 3Q YTD 2018 1.9% 4,000 Revenue $M 3,000 1.8% 2,000 2.2% 1,00
Slide 8: Solid growth in banking outside top five accounts
Solid growth in banking(1) outside top five accounts Organic constant currency revenue growth $2.60B +0.2% $2.60B Top 5 Accounts (11.8%) $0.79B $0.90B $1.81B All Other Accounts $1.70B +6.4% September 30, 2017 YTD September 30, 2018 YTD In 3Q18 expansion of our digital capabilities brought growth bac
Slide 9: Acquisitions and investments over the last five years have steadily enhanced our business
Acquisitions and investments over the last five years have steadily enhanced our business Healthcare Services Customer Marketing & Digital Healthcare Experience Customer Marketing & Salesforce Platform & Design Experience Experience Consulting Consulting (Europe) (Europe) (APAC) Digital Energy Solut
Slide 10: Disciplined and consistent approach to potential acquisitions
Disciplined and consistent approach to potential acquisitions Seek out quality businesses that expand our: Digital Capabilities & New Buyers Geographic Reach Vertical Expertise Transform Interactive Cognizant Customer Digital Business Analytics and AI Experience Intelligent Process Digitize Business
Slide 11: Operating Margins
Operating Margins
Slide 12: Investing for growth while delivering margin expansion and improved operational efficiencies
Investing for growth while delivering margin expansion and improved operational efficiencies Non-GAAP operating margin(1) Accomplished 2017-2018 ~650 bps ~(400) bps Remaining for 2019 ~22% 19.5% Transformational Deals Pricing Levers (BPaaS) Sales / Marketing Pyramid / Utilization Inorganic Investmen
Slide 13: Advantages of moving to a revised non-GAAP margin definition
Advantages of moving to a revised non-GAAP margin definition 2019 Non-GAAP Aligns incentives when determining build vs. Operating ~22% buy strategy Margin Target Increases comparability to peers and consistency with other large technology companies Improves alignment with investor analysis 2019 Adju
Slide 14: Focus on operational excellence supports consistent margin expansion and investment for growth
Focus on operational excellence supports consistent margin expansion and investment for growth Margin Investments in enhancement future growth • Mix shifts to higher value services • Tuck-in M&A Targeting 2019 • Selective pursuit of business • Strategic Partnerships & JVs Adjusted Operating opportun
Slide 15: Capital Allocation
Capital Allocation
Slide 16: Strong cash generation supports balanced capital deployment
Strong cash generation supports balanced capital deployment and existing cash on balance sheet provides further flexibility Components of capital deployment program beginning in 2019 Utilize ~50% of global FCF(1) annually for dividends and share repurchases • Target ~20% annual dividend payout ratio
Slide 17: New Guidance Framework
New Guidance Framework
Slide 18: Providing greater transparency in our guidance
Providing greater transparency in our guidance Metric Current Future Definition: Revenue as reported in USD Definition: Constant Currency Revenue Growth Revenue Guidance Period: Quarterly and annually Guidance Period: Quarterly and annually Precision: Range Precision: Range Definition: Non-GAAP oper
Slide 19: Closing Takeaways
Closing Takeaways
Slide 20: Mid-term financial objectives expected to drive double digit annual return
Mid-term financial objectives expected to drive double digit annual return • Constant currency organic revenue CAGR 6-9% Revenue • +1%-2% annual contribution from acquisitions • Total constant currency revenue CAGR 7-11% • Targeting 2019 adjusted operating margin of ~19% (equivalent to our previous
Slide 21: Appendix
Appendix
Slide 22: Reconciliations of non-GAAP financial measures
Reconciliations of non-GAAP financial measures To supplement our financial results presented in accordance with GAAP, this investor presentation includes references to the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: Constant Currency Revenue G
Slide 23: Reconciliations of non-GAAP financial measures
Reconciliations of non-GAAP financial measures(1) Twelve Months Ended Twelve Months Ended Nine Months Ended (a) (a) (a) December 31, 2016 December 31, 2017 September 30, 2018 GAAP income from operations $2,289 $2,481 $2,108 Add: Stock-based compensation expense 217 221 199 (b) Add: Acquisition-relat
Slide 24: Reconciliations of non-GAAP financial measures
Reconciliations of non-GAAP financial measures (a) On January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted
Slide 25: Bringing it All Together: Financials & Shareholder Value
Investor Day November 16, 2018 Bringing it All Together: Financials & Shareholder Value Karen McLoughlin | Chief Financial Officer
Cognizant Technology Solutions — Investor Day (November 2018) on 6ix